Gelisim News

Stating that the coronavirus affects not only the country where it originates, but also the economy and financial markets on a global basis, Dr. Hakan Yıldırım from Istanbul Gelisim University (IGU) said: “VIX volatility index, which is the indicator that investors focus most, has reached the highest levels since 2008 global crisis. The leaps in the VIX index, also known as the fear index, are also known as an indicator of the fears of investors, actors of the global markets. The said VIX index reaching 75.00 levels reveals how high the uncertainty and fear in the market is. The uncertainty that arises brings investors to avoid risks and thus sales pressures. On the other hand, with uncertainty, investments can be said to come to a halt.”

STRATEGY OF PROTECTION FROM RISK WITH GOLD

Stating that with the spread of coronavirus to Europe inverstors has turned their faces to the gold, Dr. Yıldırım said: “As a result of the increasing demand for gold, it reached a record level by testing the 1.703.00 dollars in gold ounces. Although one of the biggest reasons for this is the increasing demand of individual investors against gold, it can be stated as the fact that institutional investors enter their current investments into a hedge strategy with gold. Although the attractiveness of oil decreases with rising gold prices, the biggest reason for the sharp declines in oil can be said to be the decline in the commercial activities of the countries.”

“ADVANTAGES FOR TURKEY”

Indicating that oil purchases in the countries are in line with the economic growth, Dr Yıldırım added: “In other words, producing countries also increase their oil purchases. For example, China has reduced daily oil demand by 250,000 barrels since the virus appeared. They developed the same behavior in other developed and developing economies, so that oil prices were inevitable. Thus, in 2020, crude oil was priced at $65.00 a barrel, while it was subject to a dramatic downward trend and decreased to $ 28.00. While the average of 2020 is 50.94, oil is around 30.00 dollars nowadays. In this case, the oil-exporting countries sokabilecekk the difficult situation, to be advantageous in terms of non-oil-dependent countries such as Turkey.”

“RECESSION IS INEVITABLE”

Stating that economies are frightened just like individual and institutional investors and believe that the recession is inevitable, Finance Expert Dr. Hakan Yıldırım said: “This is fair that these countries to believe in this situation. In real markets, where commercial activities have fallen, real gross domestic product may have a negative growth in two or more quarter periods in a row, and it already defines recession. The fight against recession depends on an effective monetary policy and fiscal policy. If countries cannot manage these policies effectively, the recession may turn into an economic crisis and this economic crisis may be equivalent to the 2008 crisis.”